$11 Billion Insurance Settlement in PG&E Bankruptcy

Major Step in Complicated Restructuring

SAN FRANCISCO (KCBS Radio) -- A group of insurers announced Friday it has reached a deal with PG&E to settle a long list of claims related to wildfires for $11 billion--well below the $20 billion it had originally sought.

It's part of a complex series of moves and countermoves playing out in federal bankruptcy court.

This group of insurers is known as the Ad Hoc Subrogation Group. In a statement, the group said, "We hope this compromise will pave the way for a plan of reorganization that allows PG&E to fairly compensate all victims and emerge from Chapter 11 (bankruptcy) by the June 2020 legislative deadline."

In many cases, insurance companies sold their claims at a discount--choosing to accept some money now rather than dig in for a lengthy battle over wildfire claims.

So-called "distressed-debt" investors typically buy claims at a deep discount from creditors of a bankrupt company, who choose to sell now rather than wait for a recovery that can take years to materialize.

P-G-and-E says this deal covers 85% of claims related to the Wine Country fires of 2017 plus last year's Butte County Camp Fire. It does not cover claimants who were uninsured or underinsured.